Broadband-Only Homes Accelerate Cable TV Declines
- by Wayne Friedman , January 8, 2015
Recent sharp declines in cable network ratings — and overall lower TV usage — can be partly attributed to the steadily growing inclusion of broadband-only homes in the
Nielsen TV sample. In a report, MoffettNathanson Research says broadband-only homes — which began to be included by Nielsen in its sample of TV homes in September 2013 — have risen to become 2.7% of entire sample.
It notes that People Using Television (PUT) levels are down across the board — with viewer 2-plus usage down 5% and 18-49 usage down 7% at of December 2014.
That usage was at its best levels back in February 2014 — around the time of the Sochi Winter Olympics — down just around 0.5% for viewers 2 plus and around a 2.9% decline for 18-49 viewers.
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At the same time, cable TV networks' ratings have dropped. Monthly total day C3 (commercial ratings plus three days of time-shifted viewing) among 18-49 viewers sank steadily over 2014, ending down around 10% for the largest 30 networks.
Broadcast networks for the most part had a better time — down a couple of percentage points in October and November, after about a 7% rise in September at the start of the TV season. From April to August of 2014, those ratings were down around 5%.
Things might not get better. Michael Nathanson, senior analyst of MoffettNathanson, writes: “Given the ratings growth seen in first quarter 2014 (most likely a combination of the Winter Olympics in Sochi and last year’s record cold U.S. winter) ratings compares do not get easier until the second quarter 2015.”
As a result, it says “national TV advertising softened, which is odd given that a scarcity of eyeballs usually drives inflation.” Year-over-year growth in quarterly national TV advertising sank from a growth of 12% in revenue for the first quarter of 2014 to being flat in the second quarter of 2014 to a drop of 1% in the third quarter 2014.
Attention, Mr. Mandese. Call for curation! The prior advertisement needs to be removed or paid for and repositioned.
Thank you on behalf of all irritated readers.
Yesterday's delivery of Nielsen's "December 2014 TV Usage Update" Report was essentially a 4-page DATA DUMP by Nielsen's "Industry Insights Team." (I believe this is the Team that Glenn Enoch has been retained to led -- and that leadership can come none too soon.) Though the report contained a few "shocking" findings, the Nielsen Transmittal contained NO "INSIGHTS" or effective, illuminating ratings analyses. Instead, clients were invited to call Nielsen if they had questions. [NOTE: There was certainly no reference to and MoffettNathanson Research in the Nielsen Report or Transmittal that I could see. The average reader has no way of knowing whether or not he/she is dealing with apple-orange comparisons by MediaPost, or comparable benchmarks (unlikely)] One can appreciate the MediaDailyNews reporter's desire to create context and perspective, but the onus is on Nielsen to explain "what's wrong" with the measurement and the methodology.
In essence, the seasoned analyst can only conclude that the Nielsen December Usage Data Report lacks "face validity." Moreover, there are a number of operational issues that could be responsible for what appears to be methodological artifacts. Expert analysts within the Cable TV Research Community have identified a number of critical Nielsen problems including 1) "Extended Home Measurement" that is not comprehensive, 2) Inexplicable differences between "Weighted In-Tabs versus UE's," and -- most disturbing at this juncture, 3) More Faulting TV Households that are "out of tab" with "greater frequency."
In her final presentation at the Nielsen National Client Meeting last month, Pat McDonough foreshadowed a potentially problematic December Usage Report, if memory serves. However, no client expected the magnitude of downward change shown yesterday. Sadly, every ckient expected that Nielsen would offer no adequate explanations. While sample turnover is a constant, it should not cause the kind of deleterious changes seen in December. Perhaps the industry needs to start working with the MRC (Media Rating Council) even before Glenn Enoch arrives, so that a methodological research study like the ones CONTAM conducted for over 35 years (until 2000) can be produced ASAP. That was the US Congressional recommendation some years ago - and it's wisdom perdures. The Major TV Broadcast Networks will have themselves to blame for not attending to basic TV measurement matters, as opposed to their non-productive digital distractions. Perhaps there's an App or Drone for that!
Onwards & Upwards.
I am a broadband only subscriber and have been for the past 4 years. Ad supported linear TV is going to require an innovative seamless integration with mobile and broadband else it's looking like a platinum Amex that still looks good now but at the expiration date will not be renewed. How many more years of retransmission fee growth will be supported by a flatlined bundled payTV model? The platinum Amex still says this is all cyclical not secular.
Leonard,
You appear well-intended. You're probably knowledgeable within your sphere of concern or influence or both.
Nonetheless, the Survey Research Scientist, as well the Advertising & Media CEO, prefers to use studies based on a sample sizes greater than one (respondent), like you.
According to Nielsen here's the latest on what a sample profile for TV audience research should look like:
"According to Nielsen’s National Television Household Universe Estimates, there are 116.4 million TV homes in the U.S. prior to the start of the 2014-15 TV season.
The number of homes represents an 0.5% increase from Nielsen’s 2013-14 TV Household Universe Estimate.
The number of persons age 2 and older in U.S. TV Households is estimated to be 296 million—also an increase of 0.5% percent from last year.
Nielsen uses U.S. Census Bureau data and auxiliary sources, such as state governments, to arrive at Advance TV Universe Estimates in early May. It then distributes final Universe Estimates before the start of each TV season.
The 2015 National Universe Estimates reflect 1) real changes in population since last year and 2) updated TV penetration levels, differentially calculated for qualifying market break and age/sex demographic categories.
Additionally, over the past several months, the percentage of total U.S. homes with televisions receiving traditional TV signals via broadcast, cable, DBS or Telco, or having a broadband Internet connection has been stable, hovering between 96% and 96.1%." (Source: nielsen NEWSWIRE)
So now you know why other readers should set aside your observations, prognostications and recommendations as well-intended twaddle.
Perhaps the American Express Company would not mine losing you as a Credit Card customer. You sound ready for a CapitalOne Debit Card. Much better for transactional analysis.
Onwards & Upwards.
Jocularly,
Nick
PS Your comment was a joke, right?
My take on this article... is that as long as Broadband-Only homes continue to grow, there will be increasing pressure for the MSOs to refine their business model. I'm predicting more consumers will flock back to OTA TV.
Families and homes that are selecting only to connect to the Internet are more likely to opt for OTA TV, along with their OTT streaming media; OTA + OTT is a winning combo (for consumers).
https://www.linkedin.com/pulse/put-down-harry-hawk <== more comments from me.
As MSOs reevaluate their business model, licensed broadcasters who are picking up retransmission fees from their local Cable System will have to consider their model as well.
Today they are legally double-dipping. They are paid for the ads that they run based on CPM and that they are also carried by the local cable company only increases their viewership. This double-dipping model works for Howard Stern, i'm not sure how well it works for the local evening news.
The record industry has learned that you can only force people to buy content they don't desire for only so long. Josh Barro NY Times article is wrong about the economic value of the massive cable TV bundle on it's face; when you factor in consumers who are choosing OTA for local TV, and Netflix/Amazon Prime, etc. for premium content, and iTunes/Google Play for "episodic" and "series" TV purchases... There maybe very little left in the bundle that consumers desire.
ESPN can certainly disintermediate the MSOs if they choose to, and more and more people are watching totally net centric content like YouTube and Twitch. The MSOs have never committed to over-building; if they had consumers would have had a choice; these numbers for PUT, are indicating that (like the case of recorded music) consumers will find alternatives when the market doesn't provide them. In this case, for the moment, Broadband, plus OTA TV, YouTube and Netflix are meeting the need for an increasing number of consumers.
Perhaps this will finally encourage local networks to give up their spectrum; free TV OTA is becoming their an albatross on their necks. But once they give up the spectrum they can't force carriage either. It's a real catch-22 for everyone.
Nicholas Schiavone - I am bemused by your term "non-productive digital distractions" because this supposedly "non-productive" space is generating more and more revenue every quarter while the price of a :30 spot drops. It's not about measuring the audience via a consensus driven statistical sampling model of a distribution monoculture that everyone calls "currency" and trades on - that kind of consensus driven data model will NEVER be possible again. Period. In the same way consumers can opt-out of the bundle, businesses can opt out of the ratings ecosystem - and do just fine, thank you. Follow the money. The ad-supported double-dipping "ecosystem" is still an incredible money-printing machine for those in it, no question about it, but it is a machine that, in many ways, does not work for the growing number of consumers who simply opt-out of it. It's not even that they can't afford pay TV - that's a factor for many, for sure - it's that they simply DON'T LIKE IT so they don't buy the bundle and the huge ad load that is piled into it now. It's also cultural. We know live TV is not a "must-see" for a growing number of people. We don't have to rehash that. While good content is (and always will be) scarce in QUANTITY it is no longer scarce in AVAILABILITY - legally or otherwise. The result? content is becoming a fully retail business, sort of like in-home video, but for first-run stuff. Soon enough, for packaged recorded content, you won't be talking about "samples" and "points" and "share" or C3, C7 or C21, you'll be taking about sales of show units, day passes and season subscriptions. Sample size = 100%; Ad Load= 0% (like Netflix. of course, Netflix, but others too) In this model, is there a place for the ad supported "local evening news" anymore? Maybe, but this may be as "niche" a business as fax machines are today. Sure we still have them and use them now and then, but they are not in any way as important as they once were. My clients (I'm in the technology side of the business, can you tell?) have clearly made a shift in their thinking in the last 6 months as they plan and deploy their content distribution strategies. While ad-supported/TVE "ratings" driven business models are still overwhelmingly huge and important, they are all gearing up - technically and operationally and economically - for a business where the double-dip ecosystem is a portion of the overall revenue flow, not the overwhelmingly dominant component it is now. In the end, I think it's going to be a healthy outcome for everyone in the business to be forced to a more direct and empirical economic model, for content owners to be forced to be closer to the consumer and for new products and value propositions to be deployed in distribution. It's a great time to be in this business because it will be a totally new business in 5 years - never boring!
Harry Hawk - And, upon much reflection, I am bemused by your conflation of correlation and causation. Productivity and revenue are not causally related when one mistakes slight of hand for the real thing. I am reminded of Ollivander's words to Mr. Potter: “Curious indeed how these things happen. The wand chooses the wizard ... ." Onwards & upwards